Before I begin, I would first like to thank the Japanese Patent Attorney Association (JPAA) for graciously inviting me to come back to Japan to speak with you today about American patent law. I always look forward to participating in these great programs. This trip is particularly special to me because one of your new leaders is a friend to many colleagues in my country. The American patent community got to know Mr. Yoshitake Kihara several years ago when he played a key role for the Japan Patent Office in Washington, D.C., as head of the IIP Office. We are very pleased to see that he has now become the Deputy Director General of the JPO.

Our relationship with Japan and the JPO is very important to the Obama administration and to the USPTO, and I hope I can help build on that relationship today. President Barack Obama is strongly committed to furthering innovation, as he demonstrated by signing into law the America Invents Act, or AIA, as well as other recent intellectual property (IP) legislation such as the Patent Law Treaties Implementation Act of 2012.

The White House also recently announced five executive actions and seven legislative recommendations designed to protect innovators from abusive litigation and to ensure the issuance of high quality patents. The White House has asked the USPTO to implement four of the five executive actions, and we are working hard to put these initiatives into effect as soon as possible. I would like to talk briefly about each of these four executive actions.

President Obama's first execution action directed the USPTO to draft rules that would require patent applicants and owners to periodically update information regarding the ownership of, and other relevant interests in, the patent or application, and in particular to identify the "ultimate parent entity" that controls the patent or application. The administration announced this executive action in conjunction with the issuance of a paper entitled "Patent Assertion and U.S. Innovation" by the President's Council of Economic Advisors, the National Economic Council, and the Office of Science and Technology Policy. The paper dealt in part with actions by entities that are known as Patent Assertion Entities (PAEs), or,what some pejoratively refer to as "Patent Trolls."

The paper observes that to obtain those fees, some PAEs engage in aggressive litigation practices that tie up consumers and competitors' legitimate innovations with threats of lawsuits for patent infringement. While the challenges created by PAEs are not new, the White House's study showed an unprecedented rise in the number of patent infringement actions brought by these PAEs. In the past two years, suits brought by PAEs have tripled, and in that same period, these suits have risen from 29 percent of all infringement filings to 62 percent of those filings. The paper also notes that PAEs often create numerous shell companies,making it difficult for defendants to discover which entity truly owns the allegedly infringed patents.

The use of shell companies also makes settlement negotiations with the PAEs particularly difficult, since it is difficult to know the full extent of their patent portfolios or the connections that may exist between different PAEs. The rules that the Obama administration has directed us to promulgate will help ensure that there will be better information on the identity of entities claiming an interest in a patent.

I would like to note that even before this first executive action was announced in June, the USPTO was already taking proactive measures on this issue. For example, in January 2013 we conducted a "Real Party in Interest" roundtable at the USPTO, where organizations and individuals provided suggestions on how the USPTO could change its rules of practice to allow it to collect and provide better ownership information on patents.

We have been hard at work preparing to undertake the rulemaking process that this executive action requires. Once we have finished work on the proposed rules, we will issue a Notice of Proposed Rulemaking in which we will present the proposed rules to the public for their review and comment. We will then review and take into account public feedback before issuing the final rules.

The second executive action announced by President Obama is meant to address concerns regarding functional claiming. In simple terms, functional claiming occurs when a claim term defines a feature by "what it does, rather than by what it is." Because of this, functional claims can result in very broad claims. According to the White House paper I mentioned, often the patents which PAEs point to in threatening litigation were ones that appeared to be very broad because of functional claiming. This appeared most acute with software patents.

The White House's executive action has tasked the USPTO with two initiatives: First, we are to bolster training for our examiners on scrutinizing functional claims. Second, over the next six months, we are to develop strategies to improve claim clarity. As part of our next steps for implementing these two initiatives, we will incorporate the valuable stakeholder input received through the Software Partnership we launched earlier this year. Designed to enhance the quality of software related patents, the partnership brings stakeholders together through a series of roundtable discussions to share ideas, feedback, experiences, and insights on software-related patents.

We have already received public input on enhancing the quality of software-related patents through two roundtable sessions which were held in February-one in Silicon Valley and one in New York City-and we have also received written comments from the public. Another Software Partnership public meeting will take place on October 17th at the University of California School of Law in Berkeley, near Silicon Valley, and we plan to host another one shortly after that at our USPTO campus in Alexandria, Virginia.

We have also begun to provide the examiner training on functional claiming as required by the executive action. In fact, we have already completed two training modules. The first module addressed the identifications of functional limitations, while the second focused on how examiners can clarify the official record as to the interpretation of that functional claiming. This second focus is immensely important, because it clarifies the record with regard to the broadest reasonable interpretation for the claim limitations, and it places the applicant on notice with regard to the USPTO's position, enabling the applicant to provide a more effective response. In the end, a complete record will create greater certainty with respect to the validity and enforceability of the patent. We have made these training modules available to the public and have included a direct link at USPTO.gov under the heading "Latest Patent Examiner Guidance."

In regard to the second part of this executive action on developing strategies to improve the clarity of issued patents, we are now considering allowing applicants to include glossaries in U.S. patent applications in which they can define terms used in the application. We plan to discuss these proposed strategies for improving the clarity of issued patents at our upcoming Software Partnership meetings, and we will seek public comments through a Federal Register Notice. We are confident that the constructive input of our stakeholders and user community will help us achieve the goals of these important White House initiatives.

The third executive action calls on the USPTO to empower "downstream users"-that is, the consumers of patented technologies. As discussed in the White House paper, PAEs are no longer solely targeting large companies with vast patent portfolios; they are also targeting small business and individuals. Accordingly, the USPTO is creating new educational and outreach materials, including an online tool that will offer answers to key questions which we hope to have ready by this fall. The USPTO has long viewed public education as a core function of the agency. Educational materials paired with ready access to public data on particular patents will create a powerful resource to support both users and developers of technology.

Finally, the White House has asked us to assist in expanding their already successful stakeholder outreach programs. We will therefore continue to actively support White House outreach efforts and help initiate events across the United States to build a broad consensus on the next steps that policymakers should take in updating our policies and laws.

In addition to stakeholder outreach, the fourth executive action also tasks the USPTO with expanding a program that we already have in place: the Thomas Alva Edison Visiting Scholars Program. This program brings distinguished academic leaders to the USPTO to pursue research projects, drawing on USPTO resources. Since the program began in 2012, we have been honored with three inaugural Edison Visiting Scholars: Professor Jay Thomas of the Georgetown University Law School, Professor Peter Menell of Berkeley's Boalt School of Law, and Professor Jay P. Kesan of the University of Illinois. These three scholars conducted valuable research on various topics, including methods to modernize the patent disclosure system, best practices for improving claim clarity, and international patent harmonization, to name a few.

Now, turning toward some of our more global activities, let me start by noting that on December 18th, 2012, President Obama signed The Patent Law Treaties Implementation Act of 2012. This is the implementing legislation for both the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs ("the Hague Agreement") and the Patent Law Treaty (PLT), into law. For those in the design community, U.S. accession to the Hague Agreement is an exciting development that has been more than a decade in the making. Passage of the act now paves the way for the U.S. to become a party to the treaty with deposit of its instrument of ratification, and we are quickly working to prepare for membership in the very near future.

As some of you may know, The Geneva Act of July 2, 1999, traces its roots to, and revises, the Hague Agreement from November 6, 1925. Unfortunately, the Hague Agreement and its previous revisions were not compatible with the design systems of countries that perform a substantive examination of designs for novelty and non-obviousness, such as the United States and Japan. The United States therefore was never a party to the original Hague Agreement. The Geneva Act, however, was negotiated with the needs of examining offices in mind.

Similar to the Madrid system for trademarks and the Patent Cooperation Treaty (PCT) system for patents, the Geneva Act facilitates IP protection for industrial designs in contracting parties by streamlining the application process for multinational design protection through the use of a single international application procedure. Instead of filing separate applications in each of the jurisdictions in which they wish to request protection, industrial design creators can file a single application.

U.S. membership to the Hague Agreement in the coming year is particularly timely as the importance of industrial design in a complex world is continually increasing. Industrial designs can make products intuitive, easy to use, appealing to look at, and comfortable to handle, masking the complex functionality that occurs beneath the surface. The Hague Agreement makes it possible for industrial designers to pursue protection for their innovative design in many of the world's most active markets by filing a single design application under the Hague Agreement.

In addition, the USPTO has been working with other offices around the world-bilaterally and through participation in multilateral groups-on numerous initiatives to develop and improve IP standards and administrative infrastructure. The IP5, for example, is a dedicated cooperation forum made up of the five largest patent offices in the world, namely the European, Chinese, Korean, U.S., and of course, Japanese patents offices.

The IP5 heads of office met this summer in Cupertino, California to continue its efforts on several collaborative initiatives, such as the Global Dossier project, one of the signature initiatives of the IP5. The Global Dossier is envisioned as a one-stop-shop for applicants to file and manage a global portfolio of patent applications and for offices to optimize work sharing and collaboration among examiners world-wide. It would establish an electronic, stakeholder-oriented environment in which applicants can execute their global IP strategy and avoid the filing of duplicate documents in multiple offices. Although the Global Dossier is still at a very early stage, it holds a great deal of promise for facilitating a paradigm shift in the way that global patent protection may be obtained and new technological information disseminated.

Another key IP5 initiative is our work on harmonizing classification systems. In cooperation with the EPO, we launched a new classification system in January of this year called Cooperative Patent Classification (CPC), and in June we began a pilot project with the Korean office to begin work classifying Korean patent documents into CPC. A harmonized classification system will lead to greater administrative efficiencies for our offices and higher quality patent grants for applicants. We look forward to continuing our cooperation with other offices on this important effort.

Another cooperation forum in which the USPTO participates is the Tegernsee Group. Formed in July 2011, it includes the USPTO, the European Patent Office, and the patent offices of Japan, Denmark, the United Kingdom, France, and Germany. The Tegernsee Group is primarily focused on advancing discussions of important issues for substantive patent law harmonization. As its last meeting in October 2012, the heads of the Group reviewed studies prepared by office experts on four issues: grace period, publication of applications, treatment of conflicting applications, and prior user rights.

The Group also tasked their experts to collaborate in developing a common questionnaire on these four subjects as a means to collect and analyze stakeholder input. This past June, the USPTO issued a report based on the findings from its questionnaire and public roundtable meetings, which it has shared with other offices and groups, including IP5.

In addition to the IP5 and the Tegernsee Group, the USPTO and JPO have also been collaborative partners in Group B+. At the initiative of the USPTO, Group B+ was formed in 2005 and consists of representatives from WIPO Group B industrialized countries, the EPO, the European Commission, WIPO, and observer countries (currently limited to Korea and Singapore). During Group B+'s last meeting in October 2012, the Group discussed a range of matters, from studies on overlapping patent rights-commonly known as patent thickets-to work sharing, cross border recognition of attorney client privilege, and sufficiency of disclosure in patent applications. Group B+ will meet again at the upcoming WIPO General Assembly in late September, where we hope to advance work on a number of issues of mutual interest, such as work-sharing cooperation and PCT improvements.

Now, I would like to briefly tell you about some other initiatives we have undertaken based on the goals set forth in our 2010-2015 Strategic Plan, including optimizing patent quality and timeliness, and providing domestic and global leadership to improve IP policy, protection and enforcement worldwide. We have been especially active in encouraging shared access to prior art. For example, in an effort to expand our coverage of worldwide patent documentation, we launched the USPTO's Global Patent Search Network last month.

Initially, the Global Patent Search Network will provide access to Chinese patent information from the State Intellectual Property Office (SIPO) of the People's Republic of China. Documents available include published applications and granted patents and utility models from 2008 to 2011. These documents will be available in both Chinese text as well as English machine translations, which will allow searching of these documents to be performed in both languages. The immediate availability of English machine translations will effectively address the language barrier and allow for quick analysis of the relevance of the prior art, and can lessen the need for costly human translations.

We also have plans to add other international patent collections in the future. Overall, this new search tool is intended to make examination with multiple international patent collections more efficient. The Global Patent Search Network is the first patent-related initiative to implement cloud computing, which will allow us to increase operational efficiency and respond faster to the demands of our examiners and the public. The introduction of the Global Patent Search Network will be a valuable tool for improving search quality and comprehensiveness in today's global IP market. This service will not only be accessible to our examiners, but to the public as well through USPTO.gov.

In addition to expanding our patent examiners' access to prior art, we have also been providing examiners with additional training in our continuing effort to prepare them for the changes that resulted from implementation of the first-inventor-to-file provision of the America Invents Act (AIA). We have already completed the first phase of this training, which included an introductory video, a live lecture, and a follow-up video on how to examine patent applications under the new AIA rules. The second phase consisted of one-on-one training with a first-inventor-to-file expert for those examiners who will be presented with an AIA case requiring examination under the first-inventor-to-file provision in the near future. Last month we started the third and final phase of the training. This phase involves more in-depth instruction on the first-inventor-to-file system and its impact on patent prosecution.

Since I have been discussing some of our international initiatives and examiner core training, I would now like to combine those two themes and briefly mention some of the recent successes of our Global Intellectual Property Academy (GIPA). GIPA is the USPTO's primary forum for educating both domestic and international government officials as well as other groups of dedicated stakeholders on a variety of different IP-related topics. We conduct these training programs at the USPTO and abroad.

In the first and second quarters of this current year, GIPA conducted 15 programs with U.S small and medium-sized enterprises and 44 training programs for 1,937 foreign officials. Some of these programs included seminars on "What Every Small Business Must Know about Intellectual Property," the problem of counterfeiting and piracy, the use of specialized intellectual property courts, and addressing IP infringement in the digital environment. One program brought nearly 300 judges of the International Association of Judges from all corners the world to the USPTO campus to share knowledge on IP awareness and enforcement.

I should add that thanks to a collaborative effort between the Japan Overseas Fellowship Program and the U.S. State Department's International Visitor Leadership Program, we hosted a JPO examiner to study U.S. examination practices at the USPTO from November 2012 through March 2013. And just recently, two other JPO examiners spent nearly three months at the USPTO working together with our International Patents Operations group on projects involving information technology and work-sharing.

As we continue expanding our patent examiner corps to meet current filing levels, we are making great progress in reducing "First Office Action pendency," or the time it takes to make an initial patentability determination and a final patentability determination. It currently takes, on average, 18.4 months to receive an initial patentability determination, or "First Office Action," compared to approximately 22.4 months from July of last year. Moreover, the total amount of time it takes to finally dispose of an application from start to finish, also known as "Average Total Pendency," is at 29.5 months as of July 2013, down from 33.2 months in July 2012.

I should note that these statistics are readily available to the public on the USPTO Data Visualization Center at USPTO.gov. This Data Visualization Center, or "dashboard," includes visual indicators about our continued progress to decrease examining time and pendency while maintaining the highest quality standards. Further, in addition to our dashboard on patents, we have dashboards focusing on the progress of the Patent Trial and Appeals Board (PTAB), trademarks, the Trademark Trial and Appeal Board, and our Office of External Affairs. We are very excited about the downward trends in both the backlog and pendency during the past years, and I know that with the progress we have been making through increased training and other educational initiatives, we will continue to improve.

I would like to finish by offering a brief update on our progress in establishing USPTO satellite offices around the United States. These offices will serve as places for inventors, small businesses, and entrepreneurs to learn how to navigate the patent process, meet with examiners in person, and access the USPTO's comprehensive search databases. They will be hubs for innovation and creativity and will allow us to serve entrepreneurs better than ever by getting them the patents they need so that they can attract capital, put their business plans into action, and help create more good-paying jobs.

The Elijah J. McCoy Satellite Office in Detroit celebrated its one-year anniversary on July 13. This satellite office is staffed with 95 new patent examiners, and during the past year they have issued several thousand first office actions. The Detroit satellite office is additionally staffed by Patent Trial and Appeal Board judges. Our temporary satellite offices in Dallas, Denver, and Silicon Valley are also staffed by Patent Trial and Appeal Board judges, all of who are working to reduce our inventory of appeal cases and AIA trials. We have yet to secure and occupy permanent locations for these remaining, temporary locations due to current budget constraints.

However, while the location of the Silicon Valley Office may not be permanent, its outreach into the local community is already in full swing. Office Director Michelle Lee has been actively engaging stakeholders throughout the region. Under her leadership, the office has participated in many outreach events, such as the Software Partnership, local training on AIA topics like first-inventor-to-file rules and post grant proceedings, and workshops with teachers in the local school districts on innovation, entrepreneurship, and intellectual property. The Silicon Valley office has also been taking great advantage of its location and has begun been building lasting relationships with local innovators, officials, industries, IP bar associations, venture capitalists and universities.

In closing, each of the initiatives I have discussed today helps our office continue meeting the needs of not only our domestic stakeholders, but of the global intellectual property community as well. Thank you for your time and attention. It is always a pleasure to speak with this group. I look forward to answering your questions during today's panel discussion.